KfW Moves Staff Away From Carbon Finance Unit as Demand Declines

By Mathew Carr -
Nov 1, 2012

KfW Bankengruppe, the German
government-owned development bank, has redeployed staff away
from its unit that purchases greenhouse gas credits, after
demand dropped.

“No new purchase programs will be set up due to lack of
demand from German and European compliance buyers,” Charis Poethig, a spokeswoman for the bank in Frankfurt, said yesterday
in an e-mailed response to questions. “Existing programs will
be continued, with contractual obligations fulfilled.”

An unspecified number of employees will either take up
different functions within the carbon fund department or in
other sections of the bank, Poethig said. The carbon unit will
concentrate on testing new types of emission market and programs
to cut greenhouse gases blamed for climate change, some of which
are known as Nationally Appropriate Mitigation Actions, she
said. Existing credit buying programs will conclude next year,
the bank said.

KfW has contracted to buy about 40 million metric tons of
carbon credits from 90 projects, it said. They are worth 446
million euros ($577 million) at 11.15 euros a ton, the average
price for December Certified Emission Reduction credits since
March 2008, according to data from the ICE Futures Europe
exchange in London.

CERs have plunged 84 percent in the past year and were at
1.08 euros a ton at 3:30 p.m. on ICE. UN offsets can be used by
factories, power stations and airlines in the EU carbon market,
as well as by nations with targets through this year under the
1997 Kyoto Protocol.

EU governments will probably reduce emissions outside the
bloc’s carbon market by 8.8 percent more than required under the
protocol, according to projections published Oct. 24 on an EU
website. Ireland, Portugal and Finland probably won’t need any
of the 20.5 million tons of credits they are purchasing, the
projections show.

KfW will continue to develop carbon projects and programs
in least developed nations, Poethig said. New projects in those
poorest nations can supply the EU carbon market through at least
2020, under rules of that system.

“We are cooperating successfully with public funding from
both the German Government and the EU Commission,” she said.